Monday, August 26, 2013

The following is by Katherine Martineau, IMTFI Fellow and Ph.D. Candidate in Anthropology at the University of Michigan. Reach her at kbmartin@umich.edu. The research on which this post is based was conducted with Pradeep Baisakh and Nishita Trisal. Photos by Nishita Trisal, except where stated.

Purno's house is his bank.

Purno keeps his money at home. A low-caste man in rural eastern India, his family is connected to different aid and low-income finance programs. Purno has even taken an 8000 rupee business loan from the non-profit bank located in a nearby town. But when his household saves, Purno does not take the money to the bank. Instead, he tucks it into a metal box that he hides in the thatching of his roof.

The metal box in which he keeps money.

Why do poor people like Purno continue to save their money at home? Why do they take loans from private moneylenders when there are Self-Help Groups, Grameen-style microfinance institutions, and low-rate bank loans designed for their demographic? These questions demand answers that are culturally and historically specific.

Our research in one urban and one rural low-income neighborhood was conducted through long-form open-ended conversations with ten households over six weeks. Most of our participants worked as laborers or as domestic servants and a few were small-scale entrepreneurs. These households self-identified as Below-Poverty-Line households. The households claimed monthly gross incomes between 3000 and 6000 rupees -- all made less than 25 USD per capita per month.

Below are four culturally and historically specific reasons that have emerged from our research to explain why Purno and other poor people in Odisha might choose to keep their money at home.

Banks cannot predict droughts.

Reason 1: Hardship is coming
Management of unpredictable hardship is essential to the livelihoods of our research participants. It is a temporal category, a phase that comes and goes. But it is seen as something that is likely to happen to everyone. It raises issues of liquidity, but it is not something that banks can always accommodate. We heard numerous stories of savings lost in the face of hardship -- flooding, drought, illness, and crop failures among the worst. When bad things happen, such as a terrible illness, access to money can mean life and death. The poor timing of hardship motivated many loans from private moneylenders in our study, and the expectation of hardship was repeatedly cited by our research participants as a reason to save money in their houses.

Responsibility is not a major concern in most cases, thus the occasion of hardship allows for requests for help. When Seema’s daughter contracted a high malarial fever, she borrowed the necessary amount from a neighbor who is also part of her caste group. That family had similarly received help from Seema’s family during a long illness. Hardship and its threat creates obligations and material interdependencies.

Reason 2: Liquidity is friendly

When in hardship, ask for help; when others are in
hardship, expect requests for help.Photo by Pradeep Baisakh.

Small amounts of money are constantly circulating among neighbors, friends, co-workers, and kin. This was especially true in our rural site. In the urban site it was more often confined to kin-groups and led to conflict more often. The basic principle was consistent: when in hardship, one can request help; when someone else is in hardship, one should give it. This means that knowledge about who has what circulates. There are strong moral feelings about the obligation to return assistance.

There is also moral ambivalence about removing money from social circulation as occurs publically when saving through banks. Though many of our research participants had used banks, most did not feel comfortable actually going to the bank to deposit money because everyone would know what they were doing. One participant explained that it would make people think that he thought he was rich. Of course this also becomes a risky strategy in the face of one’s own potential hardship: others are less likely to help out if they suspect you are not helping them like you could be.

Sometimes it pays to keep things from loved ones.

Reason 3: Nobody need know -- not even your husband
One’s own family members can be even more troublesome than other households when it comes to money management.

Sita takes care of the children’s expenses and that money is kept separately from the other household expenses managed by her husband Ram. A normal case of earmarking you might think. However, hidden money can foster household drama. For example one of our urban households shared by two brothers’ families had literally been split into two. Intense conflict arose from a dispute over a house loan. The brothers had resorted to building a wall separating their living spaces and cooking hearths.

Rashmi’s husband was a daily laborer who had worked his way up to headman. He drank away most of his income every night, claiming that this was necessary for job networking and that without it he wouldn’t get good jobs. He also gave money to his lover whom Rashmi believed he was supporting, along with her son. When Rashmi’s husband did come home, he’d beat her, leaving bruises that were visible during our interviews. Rashmi used to work as a domestic servant and had, back then, hidden some money from her husband and sons (who were also going out to booze at night). But at the time of our interviews she had been sick for months so the money she had hidden had run out. She faced an uncertain future. Deep shame prevented her from seeking help from others.

How do you know you can trust financial services?Photo by Pradeep Baisakh.

Reason 4: Financial services will cheat you
All of our research participants had at one point taken part in Self-Help Groups and many had bank accounts and formal bank loans. But the abundance of services had made things confusing; stories circulated about cheating and they were reinforced by the irregular appearance of itinerant financial services representatives.

Manoranjan is a father of two sons and a daughter of a marriageable age. He works as a laborer and together with his wife, a domestic servant, they save a little bit from everything they earn. They save it in a metal box in their house, which they keep locked within a locked cabinet and hidden behind some fabric. They do not have a specific idea of what they will do with their savings, but there will likely be high costs associated with their daughter’s marriage. They also hope to add a room to their house. They are ideal clients for financial services but several years ago Manoranjan had taken a “microfinance loan” only to discover that it demanded a very high interest rate. Since then, he has not trusted his money with financial services. Stories such as Manoranjan’s suggest that regulation and systems with local oversight would improve trustworthiness. However, government-led oversight and conflict resolution would face the same problems that private financial services seek to overcome -- the slowness of government and judicial action, corruption (e.g., demanding bribes from complainants), and the reproduction of entrenched caste/community inequalities in the structure of local institutions.

These four reasons for saving money at home shed light on some of the conditions affecting financial inclusion programs in Odisha, India

Monday, August 12, 2013

Introduction
The susu savings scheme has for many years served as an important avenue for savings for low income and financially excluded people in countries across West Africa. On a daily basis, these susu operators walk to their clients to collect small amounts of savings and return the full amount (minus a day’s collection as a commission) usually at the end of each month. Even though there are about four types of susu schemes in the country including a type that looks like the well-known rotating savings and credit association (ROSCA), the most common one is where an individual susu operator reaches an agreement with a client (e.g., traders in the market, hawkers, barbers, hairdressers, etc.) on an amount, commission, and intervals for collection; makes daily (or weekly) rounds on foot, bicycle or motor bike to collect the amount; and records it on a simple card kept by the client.

A susu collector with a client (Photo credit: Michael Yeboah, Field Survey Assistant)

This study attempts to provide insights into the ancient susu savings operation in Ghana and the behavioral intention or willingness of susu collectors and users to adopt a mobile money (hereinafter referred to as “MM”) platform as part of their savings practices. More specifically, this study investigates factors that determine one’s intention to adopt the MM space as a savings channel, particularly in place of a traditional way of saving among many people in West Africa, i.e. susu. Using field survey data from market traders and susu collectors in several local markets in Ghana, and applying Innovation Diffusion Theory (IDT) and Technological Adoption Model (TAM) conceptual frameworks, this study has produced some interesting findings.

Preliminary Findings from the Susu Collectors Survey

1. The average amount of money per client that the susu operators collect in a given day varies somewhat across the survey respondents. The majority of operators (61.6%) collect between GHC1 and GHC5 at a time from their clients (exchange rate: US$ 1 = GHC 1.85). The number of susu operators decreases as the amount of money collected from clients increases. This suggests how relatively small their daily savings are. The smallest percentage of susu operators in this survey (5.8%) contribute GHC20.

2. Regarding the extent to which they use mobile phones as part of their business, 39.5% of the operators reported that they often call their clients when they are not able to meet them in order to collect the daily susu contribution. While 40.7% also sometimes call their clients, 4.7% reported that they never call their clients. When the susu operator is unable to visit clients on a given day in order to make the collection, 30.7% reported that their clients call them often to inquire about their absence while 52.3% reported that their clients sometimes call them in order to find out why they were unable to turn up. This implies that although almost every one of the operators owns a mobile phone, the extent to which they use mobile phones in their daily activities is limited. When asked what the main constraints on their operations are, about 32% mentioned a lack of cooperation or consistency on the part of their clients in making the daily contribution as agreed. However, a significant proportion (30%) cited commuting or walking to and from their clients every day. For example, one operator speaking in the local language (Akan) complained during one of our interviews that “this work is so difficult and tiring; sometimes you can walk miles to one customer only for him/her to say that he could not pay because of bad sales for the day.”

3. On the specific issues about MM uptake and willingness to adopt MM in their operations, we received very interesting responses from the operators. First, while about 83% of the respondents claimed to be aware of MM as a means of transferring money, exactly half (50%) do not think that it is feasible to employ such a technology in the susu business. Second, notwithstanding the responses above, more than 62% are actually willing to adopt MM, if made available, although more than one-third (34%) perceived it to be a potential threat to their business. Some of these concerns about MM uptake were also expressed during a focus group discussion. For example, some operators believed that the process would be too complicated particularly for the market women whose education and knowledge of mobile phones are limited. Besides, the issue of network quality and the frequency of going outside a coverage area or experiencing network loss could hamper the operation and discourage savings. For example, one susu collector said, “What will happen if in the process of a client sending his/her contribution the network vanishes on the mobile phone, or the phone got stolen. Won’t somebody steal the money?” In his view, such an incident could discourage savings or lead to diminished trust along the line.

4. Others were also not sure what role they are likely to play in the event of MM adoption in susu operations. However, a few were optimistic and they are looking forward to it since they believe MM could enhance their operations by reducing the number of walk ins and outs they embark on daily basis and reduce the time they spend commuting between clients in order to make daily collections. However, if any such thing should happen, one operator suggested that they should be made agents of the telecom companies so that they can continue to earn a livelihood.

Preliminary Findings from the Susu Users Survey

1. In regard to their daily contributions, the survey responses indicate that susu users contribute a minimum of fifty Ghana pesewas (GHC 0.50) and a maximum of GHC200 with a mean payment of just a little over GHC8.

2. Among the major reasons for which respondents use susu savings rather than formal and semi-formal banking institutions, 42.2% of susu users reported that their income is too low and thus they can only save small amounts at a time. Besides, 14.9% of susu users found susu savings more convenient when compared to formal banking institutions.

A susu collector with a client in a local market (Photo credit: Barbara Andoh, Field Survey Assistant)

3. On the thorny issue of trust, while about 93% of susu users trust their susu collectors, about 55% reported that they feel quite apprehensive if they do not see their collectors every day. While 93.5% of respondents own a mobile phone themselves, only 36.5% have ever sent an SMS using their mobile phone. The proportion is much smaller (2.4%) when asked whether they have ever transferred money via their mobile to someone else, although a little over 7% has received either money or talk time credit on their mobile phones. Of those who answered in the affirmative, 55.6% reported that it is convenient to transfer money via mobile phone while 22.2% find it easy to do so as well.

4. As a key determinant for the adoption of MM services, this study reveals that only 36.5% of the respondents would be comfortable texting their susu contribution via mobile phone to susu collectors. As to whether they are willing to do so, about 41% are willing to transfer their susu savings via a mobile phone to the susu operators.

5. Of the remaining 59.1% who are unwilling to transfer their susu contribution via mobile phone, 61.8% reported that they either do not have enough knowledge or are not conversant with some of the functions of mobile phones. Others (14.6%) are skeptical as to whether their susu contributions would be delivered to the susu operator. Close to 8% also think that they may forget to send their susu contribution if MM is adopted.

6. As to whether the level of education of the susu user has some association with their willingness to adopt MM as part of susu services, the results show that about 75% of the illiterate traders and 61% of primary school dropouts are unwilling to accept MM adoption. This implies that the higher one's educational level, the more willing he/she will be to accept the use of MM.

Summary of Results from Logistic Regression Estimation

Generally, among the susu collectors, we found perceived risk, education level, relative advantage, and the age of the collector to be statistically significant in influencing the behavioral intention of MM adoption. With respect to susu users, we found such constructs as trialability, observability or awareness, compatibility or education attainment as well as the influence of the physical presence of the susu collector to be statistically significant in influencing one’s behavioral intention to accept MM. These findings have important implications for MM uptake and the modernization of the susu operations in Ghana. While MM uptake remains significantly low, these findings suggest that the way to increase uptake is to create more awareness, embark on financial literacy programs, and reduce the mistrust and perception of risk of the entire MM platform.

Concluding Remarks and Suggestions for Future Research

Although these findings are largely consistent with many previous studies on MM adoption, some of the findings are quite striking and may require further empirical research. For instance, the finding that the daily physical presence of their susu collector is the primary reason that motivates susu users to honor their savings commitment is potentially an important factor in explaining why respondents were not sure whether an MM platform would be an effective method of saving. The issue, then, is to what extent does the human factor matter vis-a-vis technology in encouraging saving among low income earners in developing countries.